Correlation Between Minbos Resources and Galan Lithium

Can any of the company-specific risk be diversified away by investing in both Minbos Resources and Galan Lithium at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Minbos Resources and Galan Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Minbos Resources and Galan Lithium, you can compare the effects of market volatilities on Minbos Resources and Galan Lithium and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Minbos Resources with a short position of Galan Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minbos Resources and Galan Lithium.

Diversification Opportunities for Minbos Resources and Galan Lithium

0.78

Correlation Coefficient

Minbos Resources  Galan Lithium

Poor diversification

The 3 months correlation between Minbos and Galan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Minbos Resources and Galan Lithium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galan Lithium and Minbos Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Minbos Resources are associated (or correlated) with Galan Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galan Lithium has no effect on the direction of Minbos Resources i.e., Minbos Resources and Galan Lithium go up and down completely randomly.

Pair Corralation between Minbos Resources and Galan Lithium

Assuming the 90 days trading horizon Minbos Resources is expected to under-perform the Galan Lithium. But the stock apears to be less risky and, when comparing its historical volatility, Minbos Resources is 1.15 times less risky than Galan Lithium. The stock trades about -0.06 of its potential returns per unit of risk. The Galan Lithium is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Galan Lithium on December 21, 2024 and sell it today you would lose (1.00) from holding Galan Lithium or give up 8.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Minbos Resources  vs.  Galan Lithium

Minbos Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Minbos Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Galan Lithium

Risk-Adjusted Performance

Very Weak

Over the last 90 days Galan Lithium has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Galan Lithium is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Minbos Resources and Galan Lithium

The main advantage of trading using opposite Minbos Resources and Galan Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minbos Resources position performs unexpectedly, Galan Lithium can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Galan Lithium will offset losses from the drop in Galan Lithium's long position.

The idea behind Minbos Resources and Galan Lithium pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.